The gold price has hit a fresh record peak on Wednesday as investors turn to safe-haven assets amidst ongoing geopolitical tensions in the Middle East and US political uncertainty. The expectation of interest rate cuts by major central banks has also played a role in supporting the non-yielding yellow metal. However, the US Dollar’s rally and bets for smaller Fed rate cuts may cap the XAU/USD.
The US Dollar continues to strengthen as expectations for a less aggressive policy easing by the Federal Reserve grow. Traders are predicting a nearly 90% chance of a 25 basis point rate cut at the next monetary policy meeting in November. Additionally, the possibility of former President Donald Trump winning the US Presidential election fuels speculation about potentially inflation-generating tariffs, leading to an extended selloff in the US bond market and higher yields.
Technical analysis shows that the XAU/USD is facing resistance near the $2,750 area and an ascending trend-channel resistance near $2,767. A decisive break above this barrier could lead to further upside towards the $2,800 mark. Alternatively, if the price slides, it may find support near $2,725 and lower towards $2,700 and $2,680-2,675 levels. The 100-period Simple Moving Average on the 4-hour charts provides strong support.
In terms of currency movements, the US Dollar was the strongest against the Japanese Yen on Wednesday. The heat map below shows the percentage changes of the US Dollar against other major currencies like the Euro, British Pound, Canadian Dollar, Australian Dollar, and Swiss Franc. This information provides valuable insights for traders and investors looking to make informed decisions in the forex market.
Overall, the gold price continues to gain traction amidst a combination of supporting factors, including geopolitical tensions, US political uncertainty, and expected interest rate cuts. However, the strength of the US Dollar and bets for smaller Fed rate cuts may limit the upside potential for the XAU/USD. Traders are advised to closely monitor technical levels, currency movements, and market developments to navigate the current environment and make informed trading decisions.
